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Glatfelter Reports Third Quarter 2017 Results

Glatfelter (NYSE:GLT)today reported net income of $12.1
million, or $0.27 per diluted share for the third quarter of 2017
compared with net income of $19.6 million, or $0.44 per diluted share in
the third quarter of 2016. Adjusted earnings for the third quarter of
2017 was $21.9 million, or $0.50 per diluted share compared with $24.0
million, or $0.54 per diluted share, for the same period a year ago. On
an adjusted basis, earnings before interest, taxes, depreciation and
amortization and excluding pension expense ("Adjusted EBITDA") for the
three months ended September 30, 2017 and 2016, totaled $50.6 million
and $49.1 million, respectively, an increase of 3.1%. Adjusted earnings
and Adjusted EBITDA are non-GAAP financials measures for which
reconciliations to the nearest GAAP-based measure are provided within
this release.

Consolidated net sales totaled $413.3 million and $405.3 million for the
three months ended September 30, 2017 and 2016, respectively. In the
Composite Fibers and Advanced Airlaid Materials business units, net
sales increased by 5.0% and 6.6%, respectively, on a constant currency
basis. Specialty Papers' net sales declined 4.0% in the
quarter-over-quarter comparison.

"Our third quarter results reflect continued strong performance from our
engineered materials businesses," said Dante C. Parrini, Chairman and
Chief Executive Officer. "Composite Fibers and Advanced Airlaid
Materials each posted revenue and profit growth during the quarter
compared to the prior year. Composite Fibers delivered a 17% improvement
in operating profit driven primarily by a strong recovery in shipments
of wallcover products and growth in other key product lines. Likewise,
our Advanced Airlaid Materials business generated a 29% profit
improvement with volume growth largely coming from personal hygiene and
wipes products. The strength of these businesses counterbalanced results
from Specialty Papers, which continued to be challenged by the
supply-demand and pricing pressures in the uncoated free sheet market."

Mr. Parrini continued, "Looking ahead to the fourth quarter, we expect
our engineered materials businesses to post a solid finish to the year.
We are also excited about the initial start-up of our new airlaid
facility in Fort Smith, Arkansas which we expect will allow us to meet
our target for commercial shipments beginning in the first quarter of
2018. Specialty Papers' markets remain challenging but we are working to
implement the recently announced price increase and we expect to realize
the full run-rate benefit of the cost improvement actions we took in the
third quarter. With the wrap-up of our major capital programs this year
and the growth potential in our engineered materials businesses, we
expect significantly improved cash flow in 2018."

The following table sets forth a reconciliation of net income on a GAAP
basis to an adjusted earnings basis, a non-GAAP measure:

Three months ended September 30

2017

2016

In thousands, except per share

Amount

DilutedEPS

Amount

DilutedEPS

Net income

$

12,105

$

0.27

$

19,601

$

0.44

Adjustments (pre-tax)

Cost optimization actions

6,839

—

Specialty Papers' environmental compliance

596

5,520

Airlaid capacity expansion costs

2,581

1,051

Timberland sales and related costs

(114

)

—

Total adjustments (pre-tax)

9,902

6,571

Income taxes (1)

(123

)

(2,193

)

Total after-tax adjustments

9,779

0.22

4,378

0.10

Adjusted earnings

$

21,884

$

0.50

$

23,979

$

0.54

(1)

Tax effect on adjustments calculated based on the incremental
effective tax rate of the jurisdiction in which each adjustment
originated and the related impact of valuation allowances.

The sum of individual per share amounts set forth above may not
agree to adjusted earnings per share due to rounding.

A description of each of the adjustments presented above is included
later in this release.

Advanced Airlaid Materials' net sales increased $5.9 million in the
quarter-over-quarter comparison primarily due to a 4.2% increase in
shipping volumes from continued growth of personal hygiene and wipes
products and $1.8 million favorable impact from currency translation.

Operating income for the third quarter of 2017 increased 29.1% in the
quarter-over-quarter comparison and totaled $8.2 million. The
improvement was driven by a $1.1 million benefit from higher volumes and
a $0.4 million favorable impact from currency translation.

Specialty Papers

Three months ended September 30

Dollars in thousands

2017

2016

Change

Tons shipped

197,080

197,260

(180

)

(0.1

)%

Net sales

$

203,206

$

211,760

$

(8,554

)

(4.0

)%

Energy and related sales, net

1,236

1,346

(110

)

(8.2

)%

Operating income

12,474

18,737

(6,263

)

(33.4

)%

Operating margin

6.1

%

8.8

%

Specialty Papers' net sales decreased $8.6 million, or 4.0%, as its
markets continued to be impacted by a supply-demand imbalance resulting
in lower selling prices of $6.5 million.

Specialty Papers' operating income totaled $12.5 million in the third
quarter of 2017, compared with $18.7 million the same period a year ago.
Aggressive cost control actions and lower maintenance spending more than
offset the adverse impact of market-related downtime and higher
depreciation, and increased operating income by $1.8 million.

Other Financial Information

In the third quarter of 2017, the Company recorded a provision for
income taxes of $4.3 million on pre-tax income of $16.4 million. On an
adjusted earnings basis, the provision for income taxes totaled $4.4
million on an adjusted pre-tax income of $26.3 million. The effective
tax rate on adjusted earnings was 16.8% in the third quarter of 2017
compared with 13.0% in the same quarter a year ago. The current
quarter's tax provision includes a benefit of $2.4 million primarily
from a tax loss carryback opportunity and the release of U.S. tax
reserves due to the lapse of statute of limitations.

During the third quarter of 2017, the Company recorded $6.8 million of
one-time costs primarily related to the shutdown of a paper machine and
a 15% reduction in salaried workforce in the Specialty Papers business
unit. The costs incurred consisted of $4.5 million related to the
write-off of the machine and associated spare parts and the balance
represented severance costs for the salaried positions. These costs have
been excluded from the business unit results and from adjusted earnings.

2017 Year-to-Date Results

The following table sets forth a reconciliation of results determined on
a GAAP basis to adjusted earnings:

Nine months ended September 30

2017

2016

In thousands, except per share

Amount

DilutedEPS

Amount

DilutedEPS

Net income

$

17,994

$

0.41

$

37,734

$

0.86

Adjustments (pre-tax)

Cost optimization actions

9,627

88

Specialty Papers' environmental compliance

3,076

6,645

Airlaid capacity expansion costs

7,034

1,308

Timberland sales and related costs

(188

)

—

Total adjustments (pre-tax)

19,549

8,041

Income taxes (1)

(1,122

)

(2,736

)

Total after-tax adjustments

18,427

0.41

5,305

0.12

Adjusted earnings

$

36,421

$

0.82

$

43,039

$

0.98

(1)

Tax effect on adjustments calculated based on the incremental
effective tax rate of the jurisdiction in which each adjustment
originated and the related impact of valuation allowances.

The sum of individual per share amounts set forth above may not
agree to adjusted earnings per share due to rounding.

A description of each of the adjustments presented above is included
later in this release.

Balance Sheet and Other Information

Cash and cash equivalents totaled $84.3 million as of September 30,
2017, and net debt was $385.9 million compared with $317.2 million at
the end of 2016. (Refer to the calculation of this measure provided in
the tables at the end of this release.)

Capital expenditures during 2017 and 2016 are summarized below:

Capital Expenditures

Three months endedSeptember 30

Nine months endedSeptember 30

In thousands

2017

2016

2017

2016

Airlaid capacity expansion

$

11,426

$

2,206

$

32,847

$

21,067

Specialty Papers' environmental compliance projects

768

15,757

12,618

52,544

Other capital expenditures

18,931

18,594

56,707

43,337

Total capital expenditures

$

31,125

$

36,557

$

102,172

$

116,948

Adjusted free cash flow for the first nine months of 2017, was $(3.9)
million compared with $11.8 million in 2016. (Refer to the calculation
of these measures provided in this release.)

During the quarter, the Company paid $9.5 million to Georgia Pacific to
settle claims related to the Fox River matter. The settlement had no
effect on our overall reserve for the Fox River matter.

Outlook

Composite Fibers' shipping volumes in the fourth quarter of 2017 are
expected to be approximately 10% lower than the third quarter driven by
normal seasonality. The majority of the impact from lower shipping
volumes is expected to be offset by improved product mix. Selling prices
and overall raw material and energy prices are expected to be in-line
with the third quarter.

Advanced Airlaid Materials' shipping volumes in the fourth quarter are
expected to be approximately 3% lower than the third quarter due to
normal seasonality. Selling prices and raw material and energy prices
are expected to increase slightly compared with the third quarter. For
2018, we anticipate shipping volumes will be 10% to 15% higher than 2017
driven by the start-up of the Fort Smith, Arkansas facility.

Specialty Papers' shipping volumes in the fourth quarter are expected to
be approximately 5% lower than the third quarter of 2017 due to normal
seasonality. Selling prices are expected to be in-line and raw material
and energy prices are expected to increase compared to the third
quarter. Specialty Papers will also benefit by $1 million more than the
third quarter from the cost reduction actions.

In addition, costs associated with the Specialty Papers environmental
compliance projects and Advanced Airlaid Materials capacity expansion
are expected to be $1 million and $3 million, respectively, during the
fourth quarter and zero and $3 million, respectively, in 2018.

Consolidated capital expenditures are expected to total between $130
million and $135 million for 2017 and approximately $65 million to $70
million in 2018.

The effective tax rate on adjusted earnings is expected to be
approximately 35% for the fourth quarter of 2017 and for 2018.

Conference Call

As previously announced, the Company will hold a conference call at
11:00 a.m. (Eastern) today to discuss its third quarter results. The
Company's earnings release and an accompanying financial supplement,
which includes significant financial information to be discussed on the
conference call, will be available on Glatfelter's Investor Relations
website at the address indicated below. Information related to the
conference call is as follows:

Interested persons who wish to hear the live webcast should go to the
website prior to the starting time to register, download and install any
necessary audio software.

Caution Concerning Forward-Looking Statements

Any statements included in this press release which pertain to future
financial and business matters are "forward-looking statements" within
the meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. The Company uses words such as
"anticipates", "believes", "expects", "future", "intends", "plans",
"targets", and similar expressions to identify forward-looking
statements. Any such statements are based on the Company's current
expectations and are subject to numerous risks, uncertainties and other
unpredictable or uncontrollable factors that could cause future results
to differ materially from those expressed in the forward-looking
statements including, but not limited to: changes in industry, business,
market, and economic conditions in the U.S., demand for or pricing of
its products, market growth rates and currency exchange rates. In light
of these risks, uncertainties and other factors, the forward-looking
matters discussed in this press release may not occur and readers are
cautioned not to place undue reliance on these forward-looking
statements. The forward-looking statements speak only as of the date of
this press release and Glatfelter undertakes no obligation, and does not
intend, to update these forward-looking statements to reflect events or
circumstances occurring after the date of this press release. More
information about these factors is contained in Glatfelter's filings
with the U.S. Securities and Exchange Commission, which are available at www.glatfelter.com.

About Glatfelter

Glatfelter is a global supplier of specialty papers and engineered
materials, offering innovation, world-class service and over a century
and a half of technical expertise. Headquartered in York, PA, the
Company employs approximately 4,200 people and serves customers in over
100 countries. U.S. operations include facilities in Pennsylvania and
Ohio. International operations include facilities in Canada, Germany,
France, the United Kingdom and the Philippines, and sales and
distribution offices in China and Russia. Glatfelter's sales approximate
$1.6 billion annually and its common stock is traded on the New York
Stock Exchange under the ticker symbol GLT. Additional information may
be found at www.glatfelter.com.

P. H. Glatfelter Company and subsidiaries

Consolidated Statements of Income

(unaudited)

Three months endedSeptember 30

Nine months endedSeptember 30

In thousands, except per share

2017

2016

2017

2016

Net sales

$

413,325

$

405,301

$

1,191,380

$

1,213,932

Energy and related sales, net

1,236

1,346

3,346

4,013

Total revenues

414,561

406,647

1,194,726

1,217,945

Costs of products sold

359,826

345,477

1,052,626

1,056,209

Gross profit

54,735

61,170

142,100

161,736

Selling, general and administrative expenses

33,399

35,747

100,484

104,796

(Gains) losses on dispositions of plant, equipment and
timberlands, net

(24

)

5

(50

)

31

Operating income

21,360

25,418

41,666

56,909

Non-operating income (expense)

Interest expense

(4,547

)

(3,895

)

(13,031

)

(11,964

)

Interest income

51

52

209

204

Other, net

(478

)

(573

)

(906

)

(956

)

Total non-operating expense

(4,974

)

(4,416

)

(13,728

)

(12,716

)

Income before income taxes

16,386

21,002

27,938

44,193

Income tax provision

4,281

1,401

9,944

6,459

Net income

$

12,105

$

19,601

$

17,994

$

37,734

Earnings per share

Basic

$

0.28

$

0.45

$

0.41

$

0.87

Diluted

0.27

0.44

0.41

0.86

Cash dividends declared per common share

$

0.13

$

0.125

$

0.39

$

0.375

Weighted average shares outstanding

Basic

43,617

43,576

43,601

43,552

Diluted

44,182

44,133

44,410

44,059

Business Unit Financial Information

(unaudited)

Three months ended September 30

Dollars in millions

Composite Fibers

Advanced Airlaid Materials

Specialty Papers

Other and Unallocated

Total

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

Net sales

$

142.3

$

131.7

$

67.8

$

61.9

$

203.2

$

211.8

$

—

$

—

$

413.3

$

405.3

Energy and related sales, net

—

—

—

—

1.2

1.3

—

—

1.2

1.3

Total revenue

142.3

131.7

67.8

61.9

204.4

213.1

—

—

414.6

406.6

Costs of products sold

115.0

105.8

57.2

53.5

179.7

180.1

7.9

6.1

359.8

345.5

Gross profit (loss)

27.3

25.9

10.6

8.4

24.7

33.0

(7.9

)

(6.1

)

54.7

61.2

SG&A

10.9

11.9

2.4

2.0

12.2

14.3

7.9

7.5

33.4

35.7

(Gains) losses on dispositions of plant, equipment and
timberlands, net

—

—

—

—

—

—

—

—

—

—

Total operating income (loss)

16.4

14.0

8.2

6.4

12.5

18.7

(15.8

)

(13.6

)

21.4

25.4

Non operating expense

—

—

—

—

—

—

(5.0

)

(4.4

)

(5.0

)

(4.4

)

Income (loss) before income taxes

$

16.4

$

14.0

$

8.2

$

6.4

$

12.5

$

18.7

$

(20.8

)

$

(18.0

)

$

16.4

$

21.0

Supplementary Data

Net tons sold (thousands)

43.8

39.1

26.2

25.2

197.1

197.3

—

—

267.1

261.5

Depreciation, depletion and amortization

$

7.1

$

6.9

$

2.5

$

2.4

$

8.0

$

6.4

$

3.8

$

0.6

$

21.4

$

16.3

Capital expenditures

3.8

5.1

12.6

4.3

10.2

26.7

4.5

0.5

31.1

36.6

Nine months ended September 30

Dollars in millions

Composite Fibers

Advanced Airlaid Materials

Specialty Papers

Other and Unallocated

Total

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

Net sales

$

400.6

$

391.6

$

190.4

$

183.4

$

600.3

$

638.9

$

—

$

—

$

1,191.4

$

1,213.9

Energy and related sales, net

—

—

—

—

3.3

4.0

—

—

3.3

4.0

Total revenue

400.6

391.6

190.4

183.4

603.6

642.9

—

—

1,194.7

1,217.9

Costs of products sold

322.2

316.0

160.7

157.5

555.7

574.1

14.0

8.6

1,052.6

1,056.2

Gross profit (loss)

78.4

75.6

29.7

25.9

47.9

68.8

(14.0

)

(8.6

)

142.1

161.7

SG&A

32.9

35.1

6.9

6.2

36.0

40.9

24.7

22.6

100.5

104.8

Losses on dispositions of plant, equipment and timberlands, net

—

—

—

—

—

—

—

—

—

—

Total operating income (loss)

45.5

40.5

22.8

19.7

11.9

27.9

(38.7

)

(31.2

)

41.7

56.9

Non operating expense

—

—

—

—

—

—

(13.7

)

(12.7

)

(13.7

)

(12.7

)

Income (loss) before income taxes

$

45.5

$

40.5

$

22.8

$

19.7

$

11.9

$

27.9

$

(52.4

)

$

(43.9

)

$

27.9

$

44.2

Supplementary Data

Net tons sold (thousands)

124.5

116.7

76.6

74.1

578.4

597.7

—

—

779.5

788.5

Depreciation, depletion and amortization

$

20.9

$

21.2

$

7.1

$

7.0

$

22.9

$

19.7

$

5.4

$

1.8

$

56.3

$

49.7

Capital expenditures

10.6

13.7

36.1

25.0

44.2

77.4

11.3

0.8

102.2

116.9

The sum of individual amounts set forth above may not agree to the
consolidated financial statements included herein due to rounding.

This press release includes a measure of earnings before the effects of
certain specifically identified items, which is referred to as adjusted
earnings, a non-GAAP measure. The Company uses non-GAAP adjusted
earnings to supplement the understanding of its consolidated financial
statements presented in accordance with GAAP. Non-GAAP adjusted earnings
is meant to present the financial performance of the Company's core
operations, which consist of the production and sale of specialty
papers, composite fibers papers and airlaid non-woven materials.
Management and the Company's Board of Directors use non-GAAP adjusted
earnings to evaluate the performance of the Company's fundamental
business in relation to prior periods. For purposes of determining
adjusted earnings, the following items are excluded:

Cost optimization actions. These adjustments reflect charges
incurred in connection with initiatives to optimize the cost structure
of certain business units in response to changes in business
conditions. The costs are primarily related to headcount reduction
efforts, asset write-offs and certain contract termination costs.

Specialty Papers environmental compliance. These adjustments
reflect non-capitalized, one-time costs incurred by the business unit
directly related to the compliance with the U.S. EPA Best Available
Retrofit Technology rule and the Boiler Maximum Achievable Control
Technology rule. This adjustment includes costs incurred during the
transition period in which the newly installed equipment was brought
on-line.

Airlaid capacity expansion costs. These adjustments reflect
non-capitalized, one-time costs incurred related to the start-up of a
new airlaid production facility in Fort Smith, Arkansas.

Timberland sales and related costs. These adjustments exclude
gains from the sales of timberlands as these items are not considered
to be part of our core business, ongoing results of operations or cash
flows. These adjustments are irregular in timing and amount and may
significantly impact our operating performance.

Unlike net income determined in accordance with GAAP, non-GAAP adjusted
earnings does not reflect all charges and gains recorded by the Company
for the applicable period and, therefore, does not present a complete
picture of the Company's results of operations for the respective
period. However, non-GAAP adjusted earnings provide a measure of how the
Company's core operations are performing, which management believes is
useful to investors because it allows comparison of such operations from
period to period. Non-GAAP adjusted earnings should not be considered in
isolation from, or as a substitute for, measures of financial
performance prepared in accordance with GAAP.